Author Topic: 25, Want to be like you guys, but not sure what else to do  (Read 17097 times)

Aushin

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25, Want to be like you guys, but not sure what else to do
« on: July 17, 2012, 12:17:33 PM »
Heya, let's get into it:

Debts:
   28k in student loans
            -- 7,700 @ 3.75% (Sallie Mae, which I think is currently halved by some law from 6.5%)
            -- 20,500 @ 6% (Dept. Education)

Monthly Income:
    $2,180 post-tax

Monthly Expenses:
   "Rent" -- $800 (I help pay a large chunk of my mother's mortgage because she can't afford the house on her own)
   Loans' total min payment - $250
   Cell phone plan -- $110 ($210 in reality but it is a family plan in my name that mom/sis use and spend 50 apiece on)
   Gas -- $250 (70 mile round trip commute, 5 days a week, database admin job. 
                        I carpool 1 day a week when a friend's schedule syncs up)
   Lexington Law -- $100 (see Credit Score below)
   Car insurance -- about $120 a month (NJ, it would be roughly 2x worse if it wasn't in my grandmother's name)
   Guitar lessons -- $140 (my vice.  feel free to crap all over me, but it keeps me sane)
   
Housing situation:
   There is 80,000 left on the mortgage, which has been getting paid for 15 years now.  My mother/stepfather's names are on the house.  They are divorced.  Her credit is too bad for them to allow her to take sole ownership of the house.  Monthly payment 1100, she gets 800 a month in child support and 800 a month from me.  She has recently started a house cleaning business and has 7 clients totaling to what I estimate is about 500 dollars a month.  Because she is not self-sufficient and my finances are already stretched, moving closer to work is not an option for me.

Car situation:
   I drive a 2000 Dodge Neon with 230,000 miles on it. It's currently being looked at for repairs, I am currently remoting into work

Work situation:
   I live 35 miles (45 minute drive) from work.  Even though I can do my work remotely, the company policy is very strict about not allowing it     except in cases of emergency.  I'm on my third year at the company and have neither asked for nor received a promotion or raise (excluding the 3% cost of living raise that we are given after annual reviews each year, so technically I have gotten a 6.9% raise after two years.

Credit score: 680+

I have no credit cards, though I probably should just to build that crappy score.  My credit also took a hit when I needed an emergency tetanus shot when I was uninsured and unemployed in 2009 and my shot was administered by a private doctor working the ER who wouldn't accept Charity Care.  I hired a company called Lexington Law ($100 a month) in May to get the negative items removed prior to paying the debt of 800 dollars back.   So far they've cleaned 2 of my 3 major credit reports.

That's just about every pertinent thing I can think of.  Since I started reading this blog a few months ago I limit my non work driving to a minimum, haven't bought a restaurant/takeout meal and, if I hang out with friends in Atlantic City, I just drink some free drinks and watch them gamble.
 
I should mention that I am currently doing some side contracted database work in my free time that will soon bring in another 800 pre-tax, but I do not know if that will ever become a steady income stream or if it's a one-project thing. 

So, um.  You're the mustaches.  I'm poor.  And it doesn't feel like it's getting any better.  Help!


   
   
         

arebelspy

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #1 on: July 17, 2012, 12:55:32 PM »

Monthly Expenses:
   "Rent" -- $800 (I help pay a large chunk of my mother's mortgage because she can't afford the house on her own)
   

37% of your net on rent is a lot.  It may be time to look into other options with that house (such as selling and moving to a smaller place, or a short sale if underwater, or at the very least refinancing to make sure you have a super low rate and lower the payment on it).
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tannybrown

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #2 on: July 17, 2012, 01:00:45 PM »
I'd say that:

-The cell phone plan is the quick win
-The rent is the big win
-Increased income is the long term win, possibly with a shorter commute attached to it.

Jamesqf

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #3 on: July 17, 2012, 01:18:04 PM »
I'd be surprised if "rent" is going to be a big win.  Don't know about New Jersey, but I suspect it'd be hard to find a place for much less, especially remembering that a part of the $800 should really be labeled "support of parent".

In addition to the cell phone plan (3 pay-as-you-go phones would be a lot cheaper, unless you spend hours talking on them), I would look at the $100 going to that Lexington Law.  While I'm no expert, everything I've seen about such credit-cleaning firms suggests they're basically scams.  And if you're not planning on borrowing money, why the heck do you care what your credit score is?

JohnGalt

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #4 on: July 17, 2012, 01:26:14 PM »
Housing situation:
   There is 80,000 left on the mortgage, which has been getting paid for 15 years now.  My mother/stepfather's names are on the house.  They are divorced.  Her credit is too bad for them to allow her to take sole ownership of the house.  Monthly payment 1100, she gets 800 a month in child support and 800 a month from me.  She has recently started a house cleaning business and has 7 clients totaling to what I estimate is about 500 dollars a month.  Because she is not self-sufficient and my finances are already stretched, moving closer to work is not an option for me.

Obviously I don't know the whole situation here with the divorce and how the relationship is there but I would be very concerned with this.  You are paying the majority of the payment on a house that is owned by your mother and her ex-husband.  If she can't get approved on her own, it might be worth considering getting on the note yourself or discuss selling and moving the whole family closer to your work (as you are the primary earner).  With that monthly payment and 15 years in, I would hope there is some equity.  Add in what it is costing you with the commute (gas, time, wear on the car) and this situation can really hold you back - especially if your mother's ex-husband decided he wanted some piece of what you've paid into it down the line. 

Aushin

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #5 on: July 17, 2012, 01:43:37 PM »
37% of your net on rent is a lot.  It may be time to look into other options with that house (such as selling and moving to a smaller place, or a short sale if underwater, or at the very least refinancing to make sure you have a super low rate and lower the payment on it).

Well, as the comment I quoted below says, it's pretty tough to find somewhere cheaper in New Jersey without adding roommates.  If it were me, I would just room with lots of people, but it's my mother so it makes it difficult.  I don't really know much about refinancing, but I don't think it helps me in the long run.  I don't really know if I'm going to be free of my mom's debts until my mom's debts don't exist.  So the higher that monthly payment is, it kind of almost works in my favor, you know?

I'd be surprised if "rent" is going to be a big win.  Don't know about New Jersey, but I suspect it'd be hard to find a place for much less, especially remembering that a part of the $800 should really be labeled "support of parent".

In addition to the cell phone plan (3 pay-as-you-go phones would be a lot cheaper, unless you spend hours talking on them), I would look at the $100 going to that Lexington Law.  While I'm no expert, everything I've seen about such credit-cleaning firms suggests they're basically scams.  And if you're not planning on borrowing money, why the heck do you care what your credit score is?

I don't believe the mom and sis would go for the cell phone thing.  More likely to get my balls cut off than to convince them of PaYG.  Mostly because it isn't split evenly.  They pay less than 50 apiece.  It's a nice deal for them to have iPhones at that rate. 

As for Lexington Law, you might be right.  I don't know why I care about my credit score.  Though I did get declined for a credit card whose signup bonus I wanted.  I could see cutting that out.

Obviously I don't know the whole situation here with the divorce and how the relationship is there but I would be very concerned with this.  You are paying the majority of the payment on a house that is owned by your mother and her ex-husband.  If she can't get approved on her own, it might be worth considering getting on the note yourself or discuss selling and moving the whole family closer to your work (as you are the primary earner).  With that monthly payment and 15 years in, I would hope there is some equity.  Add in what it is costing you with the commute (gas, time, wear on the car) and this situation can really hold you back - especially if your mother's ex-husband decided he wanted some piece of what you've paid into it down the line. 

It might be worthwhile to get my name on the house, I agree.  It just seems so much more official and scary.  I wanted to have student loans out of the way before I went into that.  Plus, as I detailed above, I couldn't even get approved for a credit card.  It might not even be a valid option.

grantmeaname

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #6 on: July 17, 2012, 01:47:33 PM »
I don't really know if I'm going to be free of my mom's debts until my mom's debts don't exist.  So the higher that monthly payment is, it kind of almost works in my favor, you know?
If you refinance to more favorable terms, more of each dollar will go to paying down the actual debt and building equity, and less of it will go to interest. You could also refinance to a shorter term remaining on the mortgage (you can even find 10 and 5 year mortgages if you look hard enough), and it would give you a good opportunity to figure out whose name the property would be in and what sort of changes would be required there.

Aushin

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #7 on: July 17, 2012, 01:50:08 PM »
I don't really know if I'm going to be free of my mom's debts until my mom's debts don't exist.  So the higher that monthly payment is, it kind of almost works in my favor, you know?
If you refinance to more favorable terms, more of each dollar will go to paying down the actual debt and building equity, and less of it will go to interest. You could also refinance to a shorter term remaining on the mortgage (you can even find 10 and 5 year mortgages if you look hard enough), and it would give you a good opportunity to figure out whose name the property would be in and what sort of changes would be required there.

Okay, this sounds good.  I'll definitely look into a refinancing, possibly in my name.

arebelspy

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #8 on: July 17, 2012, 02:21:36 PM »
Refinancing in your name just puts the MORTAGE (I.e. debt) in your name.  Ownership of the house doesn't change with refinancing.  If your mom's ex-husband is on title, that won't change.

You need to find out who owns the house (county records).
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eriksonr

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #9 on: July 17, 2012, 02:53:26 PM »
I've been playing guitar half my life and understand the vice.  But, the lessons could go, especially at $140/month.  Any music store will have tons of books with DVDs for instruction.  Search "guitar lesson" in Youtube and you'll get more videos than you can watch.  You can even narrow it down by style.  Another option is to go to the musicians section of Craigslist.  Create a post or reply to one for people to play with.  The best way to learn is taking something new from different people.

grantmeaname

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #10 on: July 17, 2012, 02:57:41 PM »
Sorry if I wasn't clear about that. I just meant that if you're going to set aside the time to look into a refinance, it would be a good time to look into the title as well. Refinancing certainly wouldn't clear it up on its own.

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #11 on: July 17, 2012, 03:01:20 PM »
It seems like you are supporting your mom and sister to a large extent.  If your mom does not become independent of your support, you could be paying her bills for the rest of her life.  Is there a reason your mom does not have a job?  Is she capable of working?  Is her skill set saleable in the job market?  If she can work, she should be out looking for a job, the kind that will pay the mortgage and pay for her to support herself and your sister.  Maybe she can expand the housecleaning business to 30 clients and with the child support be able to pay her bills.  In your shoes, I would sit down with mom and have a frank discussion about the cleaning business, her income, her expenses, and your limited ability to help.

If I were in your shoes, the first thing to go would be the cell phones.  If your mom can afford a family plan for her and your sister, that's fine.  If not, then the cheapest pre-paid service with a minimum number of minutes would make the most sense.  That's what you can afford for yourself.

The second thing to go would be the credit repair.  There is no need to pay someone to do this and you can't afford it anyway.  What's on your report, other than the unpaid medical bill?  After three years now (the bill was from 2009), try offering the medical account holder $200 on the $800 bill, but only if they agree in writing beforehand to mark the account "paid as agreed."  Settling the bill and getting the black mark off the credit report will help you dig out of this hole.

If you can't get a credit card, you most certainly cannot get a mortgage.  That's a good thing.   In your shoes, I would not allow myself to become entangled in the house mess.  If your mother and stepfather owned this house together, then they need to decide what to do with it together, perhaps with your input.  It may be best to sell the house, divide up any equity according to the divorce settlement, and move on.

The third and most immediate problem is your car.  As things stand, without transportation you will lose your job.  A Dodge Neon with 230,000 miles belongs in the record book, not in your garage.  You don't say if you have any savings, so I assume you have none.  Figuring out how to repair or better yet replace that car is top priority.

Fourth, I would give up the guitar lessons temporarily, until I got myself out of this mess.  Practice daily for now so you have the enjoyment and improve your skill.

Once you are past the immediate emergency, you should look for ways to increase your income and improve your living situation.  Then you can start working towards FI and early retirement.

JohnGalt

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #12 on: July 17, 2012, 03:16:58 PM »
EDIT:  Another Reader covered most of my thoughts while I was typing.


I don't believe the mom and sis would go for the cell phone thing.  More likely to get my balls cut off than to convince them of PaYG.  Mostly because it isn't split evenly.  They pay less than 50 apiece.  It's a nice deal for them to have iPhones at that rate. 

Of course it's a nice deal for them... you're subsidizing it.  The bottom line here is that you are supporting them and iphones are a luxury.  If you decide that it needs to be cut, cut it.  I hate to be harsh here - but the fact of the matter is that they (and probably you as well) can't afford this type of luxury.  You're paying 6% interest on $20,000 in debt that needs to be focused on.  I see $1770/mo in expenses listed and that doesn't appear to be a complete list unless someone else is buying food, repairing your car, and all of the other little things that come up all on a $2180 take home pay. It sounds like you're essentially living paycheck to paycheck.  This is a financial emergency and sacrifices need to be made.

You say that you're "poor and it doesn't feel like it's getting any better."  You ask for help.  Cut out the luxuries, stop worrying about your credit score if you don't want to get on the mortgage note, teach yourself how to play guitar instead of paying someone else, pay down that debt, and focus on getting more contracting work to boost your income.  Do all of that - and you may be able to go from a near 0% savings rate to 40% or so (current expenses - luxuries / current income + contract income).  That would pay off your student loans in short order, snowballing into an even higher savings rate.  Then you can think about iphones and guitar lessons.

SpendyMcSpend

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #13 on: July 17, 2012, 04:00:29 PM »
Why doesn't your mom sell her house?

Jamesqf

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #14 on: July 17, 2012, 04:25:41 PM »
I don't believe the mom and sis would go for the cell phone thing.  More likely to get my balls cut off than to convince them of PaYG.  Mostly because it isn't split evenly.  They pay less than 50 apiece.  It's a nice deal for them to have iPhones at that rate.

Damned right it's a nice deal - for them.  Can I be blunt here?  You've accepted that you are poor, but the consequences of that don't seem to have sunk in yet.  Being poor means that YOU CAN NOT AFFORD AN IPHONE.  Not even one for yourself, let alone a couple for other people as well.  You likewise can't afford a cell phone plan, and don't even need a cell unless it works out cheaper than a land-line.  If mom & sis object, remind them where the money is coming from. 

SpendyMcSpend

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #15 on: July 17, 2012, 05:03:28 PM »
This thread is making me angry.  With all due respect, your mother needs to get a real job.  You are not responsible for taking care of her and if you do, you will severely limit your life choices, whether they be early retirement or for your career.  I suggest you look into how to set boundaries with family members so they don't take advantage of you.

arebelspy

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #16 on: July 17, 2012, 05:15:23 PM »
You are not responsible for taking care of her

This is a personal choice, and the OP may indeed feel responsible.

However, if that is the case, he needs to take responsibility and make some tough decisions.

This will be a rough thread for them, but hopefully good.
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James

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #17 on: July 17, 2012, 05:57:11 PM »
I agree with the others that you should cut back all luxuries right away.  Simply put your cards on the table and point out that you are not able to maintain the current lifestyle.


For the cell phones, find a way of dropping that way way down.  Even if you don't go pay-as-you-go, you can at least get it a lot lower than it is.  Make a list of changes and lay it out for them.  Make a new priority one at a time to work on, including phone plan, mortgage situation, car, food, income (ask for raise to start with), etc.  Then go back through the list and keep working on them.


As you work on specific issues feel free to ask for specific advice, we are willing to help with ideas as you have seen.  :)

englyn

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #18 on: July 17, 2012, 06:56:40 PM »
That house arrangement is scary. What happens if you help pay it off then in 10 years stepfather decides he wants half of the total, not half what it was worth when they split? Worse things have happened to members of my family after previously civil breakups.

Sell the flipping thing. I realise that it's not wholly your decision but you can make a strong case and say that you will refuse to pay money into such a precarious arrangement starting from 6 months from now.

Make sure your mother puts her portion somewhere she can't easily touch it - if she is struggling it would be all too tempting to eat away at that much needed capital.

deciduous

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #19 on: July 17, 2012, 08:49:17 PM »
I'm new here, and don't have any detailed advice to give that hasn't already been given. But I just wanted to wish you good luck. Quite a bit of the stuff in this thread is extremely harsh, but i don't think it's too far off base. Coming to this group is a good first step to acknowledging that the situation is fairly dire.

There are some scary things to keep in mind:
 1. lose your car and job, and you will be truly up shit creek. it's weird to say so, but keeping good wheels would be my top priority.
 2. the luxuries probably gotta go. i bet you could ask your existing teacher to scale back to once/month or something temporarily and he or she will work with you. just ask for lots of homework.
 3. the house situation is terrifying. if you keep paying for it without at least getting the title transferred, you are putting yourself in a life-ruiningly vulnerable postion.

good luck to you. you should feel good to even realize what is going on and trying to do something about it.

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #20 on: July 17, 2012, 09:18:07 PM »
I don't believe the mom and sis would go for the cell phone thing.  More likely to get my balls cut off than to convince them of PaYG.  Mostly because it isn't split evenly.  They pay less than 50 apiece.  It's a nice deal for them to have iPhones at that rate.

Damned right it's a nice deal - for them.  Can I be blunt here?  You've accepted that you are poor, but the consequences of that don't seem to have sunk in yet.  Being poor means that YOU CAN NOT AFFORD AN IPHONE.  Not even one for yourself, let alone a couple for other people as well.  You likewise can't afford a cell phone plan, and don't even need a cell unless it works out cheaper than a land-line.  If mom & sis object, remind them where the money is coming from.

Agreed. End of the day, that cell phone plan is in YOUR NAME, not theirs. YOU take the hit financially if it doesn't get paid off on time, and it's only $110 a month for you because your mother and sister have the money to pay that $50 a head every month. What happens when they don't?

Family deserves love and respect even in disagreements, and it goes both ways. You have every right to shut that account down any time you want or need to. This is a need to situation in so many ways. This is about doing what's best for all of you whether they realize it or not. If they don't like it? Tough toenails. Unlock their iPhones with your carrier, buy them a couple Airvoice Wireless SIM cards with a cheap Micro SIM punch off Amazon if needed, and tell them they have X number of days to transfer out their phone numbers before you close the account. If they don't like that option, they can open up new overpriced post-paid wireless accounts in their names instead.

That house arrangement is scary. What happens if you help pay it off then in 10 years stepfather decides he wants half of the total, not half what it was worth when they split? Worse things have happened to members of my family after previously civil breakups.

Sell the flipping thing. I realise that it's not wholly your decision but you can make a strong case and say that you will refuse to pay money into such a precarious arrangement starting from 6 months from now.

Make sure your mother puts her portion somewhere she can't easily touch it - if she is struggling it would be all too tempting to eat away at that much needed capital.

Seconded. When ownership is in question with these sorts of things, always expect to be on the losing end, and never put good money towards bad. Either he needs to sign away his stake before you keep paying long term (which doesn't sound possible), or owner percentage rights get solidified now and it gets sold ASAP.

Beyond that, you definitely need to either get a reliable set of wheels (I'm shocked your Neon made it even this far) or change your living distance from work by either moving closer to work or finding a closer job.

Not much else to add on the financial end outside of echoing the need to cut any and all frivolous expenditures and scale back on all utilities as much as humanly possible. Here's some help on the telecommunications end.

Emotionally, be prepared to have to wear the man of the house pants on this situation. Be sincere, be authoritative, be considerate, but make it clear that household budgets have to be brought in line to best reflect the current realities. They aren't the only ones who need help here, you do too. You either need to work together as a single unified front to get your heads above water or you all drown. They're assured destruction without your presence, your presence as a contributer is dependent upon your own financial stability, and your own financial stability is dependent upon living within your means. You can't live within your means so long as you're having to help support their shortfalls while they fail to live within their own. Make it clear you want to help but you're not afraid to walk away and that you absolutely won't destroy your own life just to make theirs a little more comfortable while putting off what is currently an inevitable outcome of failure. Help them understand how truly boned they really are without you helping, and then help them realize how fragile your capacity to help truly is in this situation without some major changes on their end.

Good luck.
« Last Edit: July 17, 2012, 09:29:17 PM by I.P. Daley »

Aushin

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #21 on: July 18, 2012, 06:56:18 AM »
Okay, I can clear up some things.

My stepfather actively WANTS me to own the house/take on the mortgage because payments have been missed over the years I was in college and it has ruined his credit score.  I just got off the phone with my mother and she claims that there's some legal agreement in the divorce stating that even though the mortgage is in both their names she is the owner of the house.  I asked her to confirm that with the county and she said she'd get back to me.

The reason she doesn't work is that disease fibromyalgia (random muscle pain, as far as I can tell).  She also has knee issues.  She's trying like hell to expand the cleaning business.  For those of you who had mean things to say, you'd have been right for about 8 months (she had a very good job taking care of a wealthy lady's disabled husband; the wealthy lady died last December). 

I didn't mention our DirecTV bill (150) in my OP.  She seems receptive to getting rid of that when I told her I'd be canceling my iPhone plan and finding something cheaper and cutting guitar to once a month (if the teacher agrees to it; if not, I have to stop altogether).

I will be calling Lexington Law today to cancel their services.  I would like to know if it's common for debt collectors to settle for 25% of the amount owed like that and if negotiations of that sort to remove credit blemishes are common.  And if I would need to have some kind of written signed agreement with them to keep them from going back on their word.

I will be taking the advice given here and saving aggressively for a new(er) car.  I'll probably make another thread about that in the future.  I was wondering, though, given what you know of my situation, do you guys have any ballpark estimate of what I should pay/should expect to pay for reliable wheels?

Thanks again for all this advice!  It's nice to know that there's a community like this where I can look for help with dire money issues.

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #22 on: July 18, 2012, 07:56:39 AM »
Fibromyalgia is generally believed to be a psycho-somatic disease.  The pain is real but the cause is believed to be psychological.  Based on the behavior of the folks I know that have been diagnosed, it should be renamed Victimitis.  The pain makes the person the center of attention and they often get access to mind-numbing and addictive painkillers and tranquilizers.  They say they can't work or do anything for themselves because of the pain and the drugs.  You will want to research this disease to understand how to deal with your mom's condition.

Your mom worked a physically demanding job caring for a disabled man.  She does physical labor cleaning houses.  She CAN work.  Instead, she watches satellite TV and talks on her i-phone, subsidized by her son.  This behavior helps no one.

To help your mom, and by example your sister, you need to end mom's dependency on others.  In your shoes, I would start by getting rid of the Direct TV and the cell phone if they are in your name.  By making it a lot less comfortable for mom to sit at home all day, she will be more motivated to get out and get a job.

Next, I would get a copy of the divorce agreement.  Don't rely on the assertions of the parties, read the settlement agreement yourself.  You need to understand the situation before you can fix it.  Based on what you said, your stepfather got the raw end of the deal in the divorce because of your half sister.  His attorney should have demanded the house be refinanced in her name only or that it be sold.  Now he's on the hook for the mortgage and your mom is in a position to trash his credit and his life. That's not fair to him.  No wonder he wants you to refinance in your name.

You cannot refinance in your name nor can your mom refinance in her name.  Neither one of you has the credit needed.  You can't afford this house anyway on your current salary.  When your sister turns 18, the $800 in child support will disappear.  The house will be even less affordable without that subsidy.  The best thing for everyone may be to sell the property.

Your transportation problem must be solved immediately if you are to keep your job.  If you cannot fix the Neon inexpensively, you are going to have to find a way to replace it.  Even if it can be fixed, every spare dime needs to be saved to replace this car with something reliable. 

The last paragraph in I.P. Daley's post contains everything most folks have said here in a nutshell.  You must take control of the situation.  Your capacity to help IS fragile, and you will fail if changes are not made.

SpendyMcSpend

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #23 on: July 18, 2012, 09:54:23 AM »
I'm not trying to be rude.  You just need to understand that this situation is not sustainable. 

arebelspy

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #24 on: July 18, 2012, 10:05:24 AM »
My stepfather actively WANTS me to own the house/take on the mortgage because payments have been missed over the years I was in college and it has ruined his credit score.  I just got off the phone with my mother and she claims that there's some legal agreement in the divorce stating that even though the mortgage is in both their names she is the owner of the house.  I asked her to confirm that with the county and she said she'd get back to me.

Of course he wants you to take over the payments.  Regardless of the divorce settlement, you should probably get the house in your name.  Go find out who is on title.  I'd wager it's both of them, and nothing was changed, despite the divorce settlement.

It's likely online, and free.  A matter of searching your county's records. Go spend 5 minutes checking if that's the case.  :)

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #25 on: July 18, 2012, 10:25:45 AM »
It's likely online, and free.  A matter of searching your county's records. Go spend 5 minutes checking if that's the case.  :)

More specifically, you can search google for the name of your county plus "cad" which stands for "central appraisal district". The CAD is the govt entity which keeps track of property records. At least it is in my state.

Good luck with your situation. Family and Money are two things which are difficult to untangle when they collide.

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #26 on: July 18, 2012, 10:30:43 AM »
My stepfather actively WANTS me to own the house/take on the mortgage because payments have been missed over the years I was in college and it has ruined his credit score.  I just got off the phone with my mother and she claims that there's some legal agreement in the divorce stating that even though the mortgage is in both their names she is the owner of the house.  I asked her to confirm that with the county and she said she'd get back to me.

Of course he wants you to take over the payments.  Regardless of the divorce settlement, you should probably get the house in your name.  Go find out who is on title.  I'd wager it's both of them, and nothing was changed, despite the divorce settlement.

It's likely online, and free.  A matter of searching your county's records. Go spend 5 minutes checking if that's the case.  :)

I'm trying to find a county records search to see this, but google isn't being cooperative.

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #27 on: July 18, 2012, 10:39:23 AM »
More specifically, you can search google for the name of your county plus "cad" which stands for "central appraisal district". The CAD is the govt entity which keeps track of property records. At least it is in my state.

That's not the case for mine.  It depends on the state and county.  But most do have it online now days (not all, but most).
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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #28 on: July 18, 2012, 12:18:36 PM »
I will be taking the advice given here and saving aggressively for a new(er) car. 

Perhaps a clarification here: you don't necessarily need a newer car, you need a more reliable car.  (Or other dependable way to get to work.)  My personal advice would be to go with an older Honda or Toyota.  I drive a 2000 Honda Insight and '88 Toyota pickup, and have had no major problems with either.

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #29 on: July 18, 2012, 02:27:44 PM »
I will be taking the advice given here and saving aggressively for a new(er) car. 

Perhaps a clarification here: you don't necessarily need a newer car, you need a more reliable car.  (Or other dependable way to get to work.)  My personal advice would be to go with an older Honda or Toyota.  I drive a 2000 Honda Insight and '88 Toyota pickup, and have had no major problems with either.

Should I save X amount of money until I think I have enough for a car, then milk the Neon for as long as it holds out without needing a major repair?  That seems mustachian.  Especially since I've already paid the year's insurance...

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #30 on: July 18, 2012, 02:39:43 PM »
If you sell the Neon and buy another car, the insurance should be prorated for the time you own each car.  Not sure how the registration/tax works in your state.

BTW, you should consider only buying liability insurance and any other minimum insurance your state requires on the Neon.  The car would be considered a total loss in almost any accident and you would get very little from the insurance company for it.

Have you found out if the Neon is fixable?

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #31 on: July 18, 2012, 05:55:04 PM »
Yes, this time it was only a spark plug.  Pretty cheap.  Drove it to work and back again today without issue.

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #32 on: July 18, 2012, 07:26:07 PM »
Their divorce paper reads, under ARTICLE III -- PROPERTY OF THE PARTIES:

The parties represent that they own the real property located at XXX.  The parties presently own this property as tenants by the entirety.

a) The wife is granted exclusive possession and ownership of the real property. 
b) In consideration for husband relinquishing his share of ownership in the house, the wife shall be solely responsible for the mortgage obligation.
c) The parties understand that husband shall sign a Quit Claim Deed extinguishing his interests when presented with same by wife.
d) The wife further covenants and undertakes at all times to keep the husband, his or her personal representatives, heirs, and assignees free, clear, harmless, and indemnified of and from the mortgage obligation.

So, she owns it, right?

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #33 on: July 18, 2012, 07:47:14 PM »
Everything is debatable in law.

If I were his lawyer and wanting to stir trouble or get back part of a house that is now partly or wholly paid for, I would argue that she violated section b, being responsible for the mortgage, when she didn't pay it. (He already complained how the late payments hurt his credit score) and violated d, by not keeping him "free, clear, harmless, and indemnified of and from the mortgage obligation." -- his credit score was affected. 

Thus, the consideration in b (giving her the house) is null and void.  In fact b only grants her the house as consideration for paying the mortgage.  But she hasn't, at times.

What you need to find out is if c happened - did he sign a quit claim, and was it filed?  Same thing we've been asking.. who is on title?
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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #34 on: July 18, 2012, 08:39:55 PM »
Did she get the quit claim deed from your stepfather and was that deed recorded?  If not, they are both still on title.

This situation is unfortunately very common.  Your stepfather is probably still on title and she did not hold up her end of the bargain to pay the mortgage.   This could get very unpleasant and adversarial.  The lender is not going to release your stepfather from the mortgage.  Your mom cannot afford to refinance the house with no job and bad credit.  You cannot afford the mortgage nor can you qualify for a new mortgage if you wanted to buy your mother and stepfather out.  Is there any way the three of you could sit down and agree to a plan to clean this mess up?

The remaining mortgage balance is $80,000.  What is the house worth today?  How much would be netted from a sale?  If the house is sold, does your stepfather receive any of the proceeds according to the divorce settlement?  How old is your sister and how much longer is your stepfather obligated to pay child support?  How much would it cost for your mom to rent something for herself and your sister?  You need to know the answers to all these questions to formulate a reasonable solution to this problem. 

Whatever you decide to do, you should seek legal advice before you act.   Real estate is complicated and mistakes are expensive.

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #35 on: July 19, 2012, 04:28:37 AM »
I'll find out the answers to as many of those questions as I can today.  I really don't want to sell the house (it is worth 205,000 or so) for a lot of reasons, chiefly that it's hard to live in NJ for cheaper than 1100 a month (which is a temporary increase in the amount to pay off back-owed payments, the new charges each month are about 900). 

I honestly think that in the long term the cheapest option possible is to own this house.  You can start telling me all the reasons I'm wrong, but I really, really think the house is affordable once she starts bringing in money and especially once the payment drops to 900.  And we would be hard-pressed to find a better rent anywhere in NJ.  And if we did, I submit that the cost would be slightly lower and the standard of living would plummet. 

I'm not saying I've dismissed what you said, but I would much rather explore options for owning this place before selling it.  And I'm not sure we can afford legal advice on the matter (but maybe that's because in my head legal advice costs tons of Aushin's Imagination Dollars).

EDIT: I called the tax office and the title is still in both their names.  Can anyone explain what a Quit Claim Deed is to me in plain English?  I read the wiki and I THINK I have the gist of it, but I'm not sure.  And I'm assuming based on what I think I know about quit claim deeds that because his name is still on the title, neither of them ever filed one or signed one.
« Last Edit: July 19, 2012, 08:07:11 AM by Aushin »

JohnGalt

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #36 on: July 19, 2012, 08:46:50 AM »
I don't think that we're necessarily saying that you need to sell the house.  We're just very concerned about the title situation with your mother's ex.  With that much equity - selling the house is probably the quickest way to fix it.  With $120,000 in equity - you may not have to go to renting after a sale.  I don't know what part of NJ you're in or what the real estate market is like there, but if there are any options in that range - just think of how much easier things would be for your mother to support herself without a mortgage to cover. 

If that's not an option you'll consider... Have you actually looked into refinancing with both you and your mother on the note?  It may be a long shot - but an $80,000 loan on a $200,000 property sounds like a fairly risk free situation for a lender, even with bad credit scores and low income.  If I was a cut-throat lender, I'd make the loan and pray that I get to foreclose so I could cash out that equity myself...

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #37 on: July 19, 2012, 09:04:45 AM »
Aushin, have you been able to file under head of household for your taxes? Seems like you're providing more than 50% of the support for your mom and sister. Might be worth checking into.

Also, yes, it's very common for debt collectors to accept much less than the amount owed. Typically, by the time a debt reaches a collections agency, it's already been sold and written off by the original creditor. You always read that collectors buy debt "for pennies on the dollar"; if that's true, 25% ain't a bad return. Negotiating to remove bad marks is also a common practice and something you could easily do on your own.

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #38 on: July 19, 2012, 09:29:09 AM »
Ask your mom and stepfather if your mom ever got him to sign a quitclaim deed and if so, was it ever recorded.  That's the easiest way to handle this.  A quitclaim deed is exactly what the name says - one party gives up their claim on the property in favor of another party.  Deeds and vesting of title differ among states.  In your shoes, I would spend the money for a consultation with an attorney before going forward with any change in the property title.

You haven't said anything bad about your stepfather.  What does he want?  It sounds like all he wants is to be done with this.  Your mom is still raising their child so they share a common interest.  He has a legitimate reason not to sign a quitclaim deed because your mom did not follow through on her committment to pay the mortgage and might not again in the future.  Can he and your mother, with you present, sit in a room together and talk this through?

If you can't resolve this amicably, your stepfather would have reason to hire an attorney, go back to court and try to force a sale to get his name off the loan.  Bad credit refi's are next to impossible right now because of GSE requirements to buy loans from originators so a sale would be the likely outcome if he won.  If keeping the house is the top priority, then you are probably going to have to work something out with your stepfather until the property can be refinanced out of his name.

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #39 on: July 19, 2012, 09:46:47 AM »
I don't think that we're necessarily saying that you need to sell the house.  We're just very concerned about the title situation with your mother's ex.  With that much equity - selling the house is probably the quickest way to fix it.  With $120,000 in equity - you may not have to go to renting after a sale.  I don't know what part of NJ you're in or what the real estate market is like there, but if there are any options in that range - just think of how much easier things would be for your mother to support herself without a mortgage to cover. 

If that's not an option you'll consider... Have you actually looked into refinancing with both you and your mother on the note?  It may be a long shot - but an $80,000 loan on a $200,000 property sounds like a fairly risk free situation for a lender, even with bad credit scores and low income.  If I was a cut-throat lender, I'd make the loan and pray that I get to foreclose so I could cash out that equity myself...


I will see if this is doable as well.  I definitely don't want the ownership of the house to be in question if we're going to pay it off.

Aushin, have you been able to file under head of household for your taxes? Seems like you're providing more than 50% of the support for your mom and sister. Might be worth checking into.

Also, yes, it's very common for debt collectors to accept much less than the amount owed. Typically, by the time a debt reaches a collections agency, it's already been sold and written off by the original creditor. You always read that collectors buy debt "for pennies on the dollar"; if that's true, 25% ain't a bad return. Negotiating to remove bad marks is also a common practice and something you could easily do on your own.

I'll be giving them a call today then to see if I can settle that for good.  Been a big pain in my side for three years and I assumed I would have to pay it in full (I still feel justified in my belief that I shouldn't pay anything and was deceived into receiving care from someone who I THOUGHT was hospital personnel). 

And I never considered filing as head of household.  As you can see from this thread, my financial and legal savvy is pretty crap :)

Is there some way to find out what our respective taxes would have been if I'd filed that way?

Ask your mom and stepfather if your mom ever got him to sign a quitclaim deed and if so, was it ever recorded.  That's the easiest way to handle this.  A quitclaim deed is exactly what the name says - one party gives up their claim on the property in favor of another party.  Deeds and vesting of title differ among states.  In your shoes, I would spend the money for a consultation with an attorney before going forward with any change in the property title.

You haven't said anything bad about your stepfather.  What does he want?  It sounds like all he wants is to be done with this.  Your mom is still raising their child so they share a common interest.  He has a legitimate reason not to sign a quitclaim deed because your mom did not follow through on her committment to pay the mortgage and might not again in the future.  Can he and your mother, with you present, sit in a room together and talk this through?

If you can't resolve this amicably, your stepfather would have reason to hire an attorney, go back to court and try to force a sale to get his name off the loan.  Bad credit refi's are next to impossible right now because of GSE requirements to buy loans from originators so a sale would be the likely outcome if he won.  If keeping the house is the top priority, then you are probably going to have to work something out with your stepfather until the property can be refinanced out of his name.

My stepfather and mother have, at best, a very strained relationship.  A few weeks ago I would have said they hated each other, but his sister (my step-aunt, a very cool lady) died in a motorcycle accident recently.  He's practically homeless because he was living with her and all of her stuff got left to her son (who most people I know claim is a drug addict).  I don't know when he's going to be kicked out, but it seems eventual.

This is a really terrible situation and I feel like the desperation on both of their sides is going to make life difficult.

arebelspy

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #40 on: July 19, 2012, 09:49:10 AM »
EDIT: I called the tax office and the title is still in both their names.  Can anyone explain what a Quit Claim Deed is to me in plain English?  I read the wiki and I THINK I have the gist of it, but I'm not sure.  And I'm assuming based on what I think I know about quit claim deeds that because his name is still on the title, neither of them ever filed one or signed one.

Yikes, that's what we were worried about.

Basically the person who is on title owns the house.  Right now that's both of them.  The person on the mortgage is irrelevant to who owns it.

A quit claim deed is literally that - they are quitting their claim on the house.

You should probably consult with a lawyer.

At this point, at the very least, your stepdad needs to sign a quit claim deed.  Whether you have your mom sign too, and put it in your name, or just have it solely in her name is up to you.

Mortgage companies often don't want to refinance except with the person on title, however, so I might base who is on title on if you would be refinancing or if she would (based on who has better credit).  Either way, get it in yours or her name, refinance.

Based on this statement from the OP:
Quote
There is 80,000 left on the mortgage, which has been getting paid for 15 years now

I'm assuming it was a 30 year mortgage.  Meaning you have 15 years left and payments of 1100/mo (also from OP).  It's likely at a very high interest rate (compared to today's rates), since it was made 15 years ago.

If you refi'd that 80k balance to a 10 year mortgage at 4%, the payment would be $810/mo. Your payment would go down $300 a month AND the house would be paid off in 10 years instead of 15.

Making 10 years of $810 payments instead of 15 years of $1100 payments will save you over $100,000.

So.. um.. refi?  As soon as possible.  :D

(After getting the title straightened out.)

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #41 on: July 19, 2012, 09:51:51 AM »
My stepfather and mother have, at best, a very strained relationship.  A few weeks ago I would have said they hated each other, but his sister (my step-aunt, a very cool lady) died in a motorcycle accident recently.  He's practically homeless because he was living with her and all of her stuff got left to her son (who most people I know claim is a drug addict).  I don't know when he's going to be kicked out, but it seems eventual.

This is a really terrible situation and I feel like the desperation on both of their sides is going to make life difficult.

Yikes, a situation like that where he may suddenly become homeless means he may suddenly need part of that house that has $125,000 in equity.

Talk to him about getting the quit claim, and spin it as "we're trying to refinance, need to have the house in her name to do so and get you off of the mortgage so it won't affect your credit anymore."
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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #42 on: July 19, 2012, 09:54:08 AM »
Fibromyalgia is generally believed to be a psycho-somatic disease.  The pain is real but the cause is believed to be psychological.  Based on the behavior of the folks I know that have been diagnosed, it should be renamed Victimitis.  The pain makes the person the center of attention and they often get access to mind-numbing and addictive painkillers and tranquilizers.  They say they can't work or do anything for themselves because of the pain and the drugs.  You will want to research this disease to understand how to deal with your mom's condition.

How dare you?  Are you a doctor?  A psychologist?  Have you ever lived in constant, severe pain?  Where do you get this "is generally believed to be...." nonsense?  Yes, some experts say that it is psychological, but many say that it is not.  Some believe it is caused by a virus.  Others believe it is autoimmune.  Regardless, this is not about enjoying being a victim or about getting access to painkillers for the sake of abusing them.  Please do not spread ignorant, insulting, damaging assumptions about a condition which you do not understand.  You have never met the OP's mother and have no idea what her work abilities are.  She should be congratulated for doing her best to work despite the pain, not accused of making it up.  Do a little research and talk to sufferers of the disease before you make such assumptions.

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #43 on: July 19, 2012, 11:52:49 AM »
Aushin:

You have an extremely complicated family and legal problem.  This problem is well beyond the scope of advice you can get from anonymous folks in a forum.  In your shoes, I would review the entire divorce settlement and talk to the two parties to see if there is common ground and a workable solution.  Whether I found one or not, I would find an attorney well versed in these issues, organize my thoughts and paperwork, and pay for a consultation and some advice.  Under no circumstances would I put my name on the title of the property without a thorough explanation of the implications, including the tax implications for your mother and stepfather as well as for you.

You sound like a very responsible guy trying to help his mom.  You are making a lot of progress on understanding and gaining control of the situation and that will help you now and in the future.  But you cannot carry the entire burden yourself.

At some point, you will have to decide how deeply you want to be involved in this mess going forward.  Helping her may become become a lot more difficult if this mess gets worse or if she does not improve her income level.  Fully supporting your mom and your sister is just not doable for the long term. 

PFgal:

Been there, done that with both an extended family member and employees.  I never said mom was making up the pain.  But I did say  "Based on the behavior of the folks I know..."

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #44 on: July 19, 2012, 12:11:59 PM »
Aushin:

You have an extremely complicated family and legal problem.  This problem is well beyond the scope of advice you can get from anonymous folks in a forum.  In your shoes, I would review the entire divorce settlement and talk to the two parties to see if there is common ground and a workable solution.  Whether I found one or not, I would find an attorney well versed in these issues, organize my thoughts and paperwork, and pay for a consultation and some advice.  Under no circumstances would I put my name on the title of the property without a thorough explanation of the implications, including the tax implications for your mother and stepfather as well as for you.

You sound like a very responsible guy trying to help his mom.  You are making a lot of progress on understanding and gaining control of the situation and that will help you now and in the future.  But you cannot carry the entire burden yourself.

At some point, you will have to decide how deeply you want to be involved in this mess going forward.  Helping her may become become a lot more difficult if this mess gets worse or if she does not improve her income level.  Fully supporting your mom and your sister is just not doable for the long term. 

PFgal:

Been there, done that with both an extended family member and employees.  I never said mom was making up the pain.  But I did say  "Based on the behavior of the folks I know..."

Then I'll say thanks to everyone for their thoughts and opinions and advice.  I think maybe I'll make a new thread about saving for and acquiring my next car.

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #45 on: July 19, 2012, 12:30:26 PM »
Good luck Aushin.

Let us know how it turns out or if you want to run anything else by us (though Another Reader's advice about seeking council is correct).
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Aushin

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #46 on: July 19, 2012, 12:42:50 PM »
Yeah I'll keep you guys updated here.  You've all really opened my eyes and I'm pretty thankful.  Can't fight the problems if you can't see them and you guys definitely made them visible lol

EDIT: And you'll be happy to know DirecTV is being canceled tonight

EDIT 2: And the carpool I set up at work will cut my gas from 250 to about 120 a month
« Last Edit: July 19, 2012, 01:01:26 PM by Aushin »

deciduous

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #47 on: July 19, 2012, 03:12:16 PM »
It's pretty amazing that you're able to keep your chin up as you win the small battles. I agree that while everyone in here seems to have the best intentions, your needs may be well beyond the kind of services we're able to provide. Talking to a lawyer or two might be a good investment of time and money.

Another Reader

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #48 on: July 19, 2012, 03:31:00 PM »
Aushin:

Is that a mustache we see growing on your upper lip?  You are doing great!!  I believe if we looked in your closet, we would find a couple of pairs of those "man of the family pants" I P Dailey spoke of!

mustachecat

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Re: 25, Want to be like you guys, but not sure what else to do
« Reply #49 on: July 19, 2012, 05:14:04 PM »
I'll be giving them a call today then to see if I can settle that for good.  Been a big pain in my side for three years and I assumed I would have to pay it in full (I still feel justified in my belief that I shouldn't pay anything and was deceived into receiving care from someone who I THOUGHT was hospital personnel). 

And I never considered filing as head of household.  As you can see from this thread, my financial and legal savvy is pretty crap :)

Is there some way to find out what our respective taxes would have been if I'd filed that way?

I wouldn't recommend dealing with the collections agency over the phone; make sure you get everything in writing. Also, do you know what Lexington Law was doing, exactly, to clean up your credit reports without you paying any of the debt down first?

I'm no tax expert, but the 2011 standard deduction for HOH was $8,500, vs. $5,800 for singles. Also, the tax rate for HOH stays at 15% up until $46,250, vs. $34,500 for singles. If your taxes aren't too complicated, it might be worth just running the numbers. Any accountants in the forums want to chime in?

Also, maybe you're not financially or legally savvy right now, but I'm super impressed with how you're handling things head-on.

Good luck with your housing situation. It sounds really tricky. But one step at a time!